In addition to a qualifying credit score, banks will require 3 tradelines (accounts) that have a 12-month payment history reporting on your credit report. If you do not have 3 tradelines reporting on your credit report, we can support your credit history with non-traditional credit (bills, accounts paid monthly that don’t report to your credit – auto insurance, utility bill, cell phone, rent…), but this can take some time to build.

If you’ve missed the mark as it pertains to your credit score, you can still purchase a home. Many people think that you cannot buy a home with a bankruptcy, shortsale or foreclosure on your credit report, and that simply is not the case. It is important to speak with a mortgage professional that understands credit and is equipped to help you begin a credit repair immediately. As always, my Team would be happy to review your credit report with you and give you appropriate feedback for getting approved to purchase a home..

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Documenting Your Employment History

Banks require a 2-year, consistent employment history. “Consistent” means both working in the same line of work, and without gaps of unemployment. Exceptions can be made if there are gaps in employment, but in most cases, a previous 6-month consistent work history prior to buying a home is required.

If you are a college student, intern, or apprentice – the time spent in school or training qualifies as “employment history” in most cases.

The bank will require you to support your work history with 2-years W-2s, 2-years tax returns, 30-days most recent pay stubs, and college degree (if applicable). More importantly, banks will order tax transcripts from the IRS to verify your tax returns and to ensure your taxes are paid. Any outstanding IRS debts may be required to be paid before buying a home. Prior to funding your loan, the bank will contact your employer to confirm that you are currently employed. Mortgage Pre-Approval Checklist With Dan Keller..

Supporting Your “Qualifying” Income

Although you earn an annual gross income, that isn’t necessarily your “qualifying income”. If you work overtime, receive bonuses or are self-employed, the bank will require you to support a consistent history of that additional income in order to use it a “qualifying income”. You will need to provide your most recent paystubs for the past month, and the bank will conduct a Verification of Employment with your employer and breakdown your income over the past year.

Cash To Close – Proof of Down Payment

Banks will require you to prove that you have money in your checking, savings, 401k, or investment account to pay for your down payment and closing costs. In many situations today, the seller is paying the borrower’s closing costs, so the only remaining funds to close is the down payment.

Down payment money must be verified – You may receive gift funds to purchase a home, but either way, you must properly support and provide a paper trail of where those funds originated.

Choosing The Right Real Estate Agent

I highly recommend that you not only work with a real estate professional that knows Puget Sound Real Estate, but more importantly, work with a real estate professional that sells real estate 40 hours/week. You would never visit a doctor that practiced medicine on the side, so why make the largest financial decision of your life with a part-time real estate agent? I work with some of Washington’s finest real estate professionals, and would be happy to refer an agent to you..

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3 Comments

Nice article Dan! Way to point out the improtance for borrowers to be really prepared when looking to apply for a home loan. I find that if clients come into the first meeting totally prepared and organized, it sets the stage for a much smoother close of escrow. Nice work!

Dan – As always you provide excellent easy to understand for your clients and people in the Puget Sound area. Your tell it like is approach is refreshing I wish you lived in Green Bay WI we’d make an awesome team!